Sunday, February 15, 2015

Switching to cash back credit cards, for now

I’ve written before about how valuable credit card points and miles can be, often times worth 1.5 to 2.5 cents per point versus redeeming points for cash back at 1 point = 1 cent.

Points and miles have taken the two of us all over the world including the Bahamas, Jamaica, Mexico, Korea, Taiwan, Hong Kong, Japan as well as several states in America.  We’ve even had the chance to experience a first class international flight together!  By using our points and miles towards travel (flights, hotel stays, and even a cruise), we’ve been able to save a ton of money.  Travel can be expensive; points and miles can greatly reduce your expenses and allow you to use your money towards entertainment and dining instead.  Not only are points and miles more valuable than cash back, redeeming them for travel is much more exciting.  Getting cash back is boring. 

With a baby on the way and a surplus of Ultimate Rewards points, we have been switching a lot of our spending to cash back credit cards lately.  I don’t see any big travel expenses in our near future.  There won’t be any immediate need to stay at any hotels.  I never recommend hoarding points and miles, because you never know when a travel rewards program or airline will devalue the point currency.  This being said, it is good to have some points and miles saved up in case of emergencies.  If a last minute travel need comes up, it’s nice to know that we can cover almost any flight with the miles we have. 

My favorite cash back credit cards
Today I’m going to share with you the cash back cards that we have been using.  Before reading on, make sure you have absolutely NO existing credit card debt.  There’s no point in earning any cash back, miles, or points if you ever carry a credit card balance.  The interest on this borrowed money negates any value you can gain from credit card rewards.  If you have any credit card debt, stop reading further, and handle your debt.  This post is not for you.

Citibank Double Cash
This no annual fee credit card effectively earns 2% cash back on every purchase you make.  You earn 1% cash back on every purchase you make, and after you pay your balance, you earn another 1% cash back.  Cash back can be redeemed once you earn up to $25 in cash rewards.  You can get cash back via a check, deposit to your linked bank account, or as a statement credit.  Heads up: do NOT redeem this cash back towards a statement credit!  Remember that Citibank will give you 1% cash back when you make a payment on your account.  Redeeming your cash back balance towards a statement credit does NOT earn you that extra 1% cash back.  This is very sneaky on Citibank’s behalf.  All this being said, this is the credit card that we mostly reach for when making everyday purchases.  It’s hard to beat the simplicity of 2% cash back on all purchases.          

AMEX Simplycash Business card
This no annual fee business credit card earns 5% cash back on purchases made at office supply stores, and wireless telephone services, 3% cash back on a category of your choice (including airfare, hotel rooms, car rentals, gas stations, U.S. restaurants, U.S. purchases for media advertising, and U.S. purchases for shipping), and 1% cash back on other purchases.  This is a no nonsense cash back business card that automatically credits the cash back you have earned each billing cycle onto your next statement.  There is no need to save up a minimum amount of cash back prior to redeeming it.  The 5% and 3% cash back categories have a purchase limit up to $25,000; further purchases earn 1% cash back.   

Old Citibank Forward card
This is an old credit card with a 5x bonus structure that is no longer offered by Citibank.  I’ve previously shared in the past that this is a credit card that offers 5x ThankYou Points at restaurants, bookstores (including and entertainment venues (like movie theatres).  ThankYou Points can be easily converted to gift cards or cash via mortgage payment (or student loan payment).  Unfortunately, new applicants of the Forward card no longer get these benefits. 

American Express Blue Cash Everyday
This no annual fee credit card earns 3% cash back at U.S. supermarkets up to $6,000 per year in purchases.  Cash back can be redeemed for a statement credit.  This card earns 2% cash back at gas stations, 2% cash back at department stores, and 1% cash back on other purchases.  Customer service with AMEX is top notch as well as warranty and purchase protection.  AMEX routinely offers promotions and bonus cash back offers (AMEX Offers, Small Business Saturday).  The only downside of this card is that being on the American Express network, the Blue Cash Everyday card may not be accepted at all merchants.  You can apply for the card here.    

Chase Freedom, Ink Plus, and Ink Cash
While redeeming Chase Ultimate Rewards points towards Chase travel partners (like United and Southwest Airlines) provides excellent value, Chase Ultimate Rewards points can also be redeemed towards cash back statement credits.  We still pay for our cell phone expenses and Internet expenses with our Ink card for 5x points.  We still pay for gift cards at Staples with our Ink card for 5x points.  When possible, we max out the Chase Freedom 5x categories each quarter.  It’s too hard to say no to 5x points.  For now we will probably keep slowly accumulating Ultimate Rewards points in case we need to redeem them for travel.       

While we don’t expect to get rich from credit card cash back rewards, it’s nice to regularly have cash back supplement our income.  If we foresee any upcoming travel expenses, we have a stash of points that can be used.  Redeeming points for cash back is definitely not as fun or exciting as towards travel, but it works for our current situation.  

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